Will rents go up this year?

Circa 37 Apartments, in Mission Valley, is among the new projects in San Diego County. More property managers and owners are considering hiking rents as a result of a slowly mending economy, rental experts say.
— Hayne Palmour IV

Circa 37 Apartments, in Mission Valley, is among the new projects in San Diego County. More property managers and owners are considering hiking rents as a result of a slowly mending economy, rental experts say.
— Hayne Palmour IV

More landlords in San Diego County are raising rents or considering doing so in response to a slowly mending economy. Hiring has seen an uptick and the stock market is heating up.

“The economy has gotten better and people are more optimistic,” said Stuart Posnock, chief executive of Garden Communities in San Diego. The company is building what will be a 2,100-unit apartment development off Interstate 15 in Mira Mesa.

Still, many property managers and owners are approaching possible rent hikes with caution.

Annual growth in rental rates, which hit 6 percent a decade ago, has now slowed to 2 percent. The slowed pace is largely due to increasing competition from the for-sale housing market. Near rock-bottom mortgage rates and rising real estate prices are drawing out once-sidelined buyers.

Property managers of older complexes face the challenge of competing with new units offering perks — from cooking classes to a future bowling alley — that may lure away their tenants.

All of those factors have contributed to “more of a balanced market” for both tenants and landlords, who appear to have equal pull on rents, said Russ Valone, a housing analyst at MarketPointe Realty Advisors in San Diego.

Yes.
55% (129)

No.
45% (104)

Here’s a Q&A of what tenants and landlords need to know about the current rental market:

Q: Where are rents in the county?

A: They averaged $1,388 in March, up 2 percent from the same time a year ago, based on MarketPointe Realty Advisors’ most recent analysis.

Q: Where is the vacancy rate?

A: The vacancy rate hit 4.71 percent in March, up slightly from 4.45 percent the same time a year ago, MarketPointe numbers show. The vacancy rate was consistently in the 2 percent range in the late 1990s to the early 2000s. It peaked at 5.26 percent in March 2009 -- matching a similar high in September 2007.

Q: Why did the vacancy rate go up from a year ago?

A: Because more units came onto the market. About 10 new projects came online in the past year, releasing nearly 1,800 units, MarketPointe’s study shows. That’s the most the county has seen in new apartment supply since 2008, when 2,100 units were added, said Valone, of MarketPointe. MarketPointe estimates 4,000 rentals are currently being built throughout the county, with many of those projects expected to open this year.

Q: What does the vacancy rate mean?

A: Despite increased supply, the vacancy rate — the percentage of unoccupied rental units — has remained steady because of increased rental demand. Why? The housing market has become increasingly competitive. Home-sale listings have hit at least a three-year low, meaning buyers are competing for limited supply. And don’t forget about the tens of thousands of borrowers who lost their homes to foreclosure since the housing crash. Many of those people likely won’t rejoin the housing market until their credit scores recover, Valone said.

Q: Where are all the new apartments?

A: Construction is happening all over the county, but major projects have popped up in areas including Mission Valley, Mira Mesa and Chula Vista.

Q: Are landlords still offering move-in perks to new renters?

A:Yes, but they’re limited. When landlords were faced with higher vacancy rates, a renter could easily snag a free month’s rent. Now, a typical incentive is a discount on the first month’s rent. At Casa Mira View, new rentals in Mira Mesa, a limited-time perk was free utilities — water and sewer only — for a year. That went away as units quickly filled up, said Posnock, of Garden Communities.

Q: What are the new apartment buildings like?

A: A lot of the new inventory is focused on amenities and luxury. At Mission Valley’s Circa 37 Apartments, one perk is a monthly cooking class at the complex’s community lounge area. At Casa Mira View, tenants will eventually get a bowling alley. Other examples at various complexes include: a pet-washing station, yoga rooms and a carousel.

This isn't a restaurant. It's actually a community lounge at Circa 37 Apartments, a new project in Mission Valley. More new apartment complexes in the county are focused on special perks like this monthly cooking class. Melanie Brown, right, and Anne Marie Birkbeck, who are residents at Circa 37 Apartments watch as chef Gina Bishop cooks chicken pad Thai with peanuts and lime.
— Hayne Palmour IV

This isn't a restaurant. It's actually a community lounge at Circa 37 Apartments, a new project in Mission Valley. More new apartment complexes in the county are focused on special perks like this monthly cooking class. Melanie Brown, right, and Anne Marie Birkbeck, who are residents at Circa 37 Apartments watch as chef Gina Bishop cooks chicken pad Thai with peanuts and lime.
— Hayne Palmour IV

“Anything that can bring them (renters) together ... and out of their apartments and meet other people,” said Sheri Stranc, regional manager of Riverstone Residential Group, which manages Circa 37 Apartments in Mission Valley.

Q: What are landlords in older apartment buildings doing to try to keep their renters?

A: An increasing number of property managers and owners are starting to spruce up their units for two key reasons. One, they have the money to do it. Second, the upgrades, likely deferred during the recession, are now much-needed, said Alan Pentico, executive director of the San Diego County Apartment Association. Pentico has seen more property owners approve landscape work, paint jobs and installations of stainless steel in apartments.

Rick Snyder, who manages 6,000 units across the county, has active renovations. At one Mission Valley complex, he’s overseeing the installation of a gym facility that will have yoga and Pilates classes.

Q: What are the chances landlords will increase rents this year?

A: It’s not out of the question. In fact, some tenants are already getting rental-hike notices. Melanie Peters, a 45-year-old social media consultant, saw her rent go up by $100 in January. That, along with noisy construction at her Normal Heights unit, prompted her to move to a smaller place in University Heights that matched her original rent of $1,000. Rents for unoccupied units at Casa Mira View have risen $150 a month. Rents at Circa 37 Apartments, which range from $1,705 to $2,960 are likely to stay the same or rise but most likely won’t fall, said Stranc, of Riverstone Residential Group.